As president and CEO of newly formed Canopy Health Innovations, a spin off of Canopy Group (TSX:WEED), a world leading diversified cannabis company, Marc Wayne is a pioneer of the medical cannabis sector. He was a co-founder of Bedrocan Canada, one of Canada’s first licensed producers of medical cannabis, and founding chairman of the Cannabis Canada Association, a trade group with 17 licensed producers. Mr. Wayne also was instrumental in developing the Canadian Consortium for the Investigation of Cannabinoids, a global innovator in education and research on medical cannabis. In this interview with BioTuesdays, Mr. Wayne discusses the potential of cannabis-based treatments and how they can offer alternatives to traditional medicines, avoid negative side effects and be disruptive to the pharmaceuticals sector.

Why was Canopy Health created?

We launched Canopy Health last December as a R&D-based biopharmaceutical company to focus on developing and researching clinically-ready, whole-plant cannabis drug formulations and dose delivery systems for human and companion animal health applications. The ultimate goal is validating diversified treatment options for Canadians and for patients and consumers in other jurisdictions, where treatment with cannabis is federally lawful. We plan to undertake a combination of exploratory studies and early-stage clinical testing to identify, develop and validate products aimed at disrupting the market for a variety of existing pharmaceutical product categories, and then commercializing those products through licensing or other arrangements. Our goal is to provide cannabinoid-based medicines as a safer and effective alternative to established therapies. So, by putting these products through clinical testing and establishing validated health claims, doctors will be more comfortable with the data behind them.

What’s your connection with Canopy Growth?

Canopy Growth, which has a market cap of about $1.2-billion, is the largest but not the controlling shareholder of Canopy Health. We have preferential access to Canopy Growth’s supply and licenses and Canopy Growth has first right to commercialize any IP and/or products we develop.

The Canopy-Health Research Model

Can you explain cannabis medicines as disruptive to the pharma sector?

I believe there is a market for natural, validated and improved cannabis products that will replace or be used as adjunct therapies to current medicines on the market for specific indications. We are beginning to see cannabis oils replacing dried flowers in the medical field because they provide the standardized reproducibility and dosage form, which researchers need and doctors are comfortable prescribing. There was a study in the U.S., looking at Medicaid expenditures in states where medical cannabis is legal, which found an 11% reduction in spending for traditional pharmaceuticals, or some $4-billion. So, in areas where medical cannabis is available, there is some disruptive effect on people using traditional medications. And we see that anecdotally from people registered in the medical marijuana program in Canada, claiming that when they use cannabis, they use less of their other medications. So we think there is an opportunity to develop and distribute cannabis products that are clinically tested and have validated health claims. And our pharmacy system is actively looking to distribute cannabis products and has applied to Health Canada to do so, which makes them a natural outlet for these products.

What’s the regulatory difference in the U.S. and Canada?

Research is difficult to do in the U.S. because cannabis is categorized as a Schedule 1 drug by the DEA, which implies that it has no acceptable medical value. That hinders the ability to access product for research and get protocols approved for research. By and large, the focus in the U.S. is on showing the harm of cannabis and it has been difficult for researcher’s to get FDA approval for protocols aiming to show efficacy of cannabis for medical purposes. However, in Canada, we have a much more favorable environment and it’s a great time to seize this opportunity. For example, the current cannabis medical program in Canada allows us to do observational and exploratory research straight in humans because we can already legally and medically access the product, even though it is a controlled substance. Part of our work is to do these early studies to find product signaling in different disease indications.

What’s the regulation state in Europe?

The European market is evolving rapidly in terms of medical cannabis. Holland, of course, has been leading regulation for many years, having supplied cannabis through their pharmacies since 2002. Germany, a much larger market, recently approved medical cannabis use and some Canadian companies, including Canopy Growth, are already exporting dried flowers in patient-ready containers to Germany. I believe these products are being sold in German pharmacies. In addition, we understand that research data in Germany will help facilitate insurance coverage. And clinical research is a big focus in the Czech Republic, which also has a federal medical cannabis program.

canopy-health positioning

What is Canopy Health working on?

We’re not disclosing what we’re working on specifically, but in general, we’re targeting whole-plant, multiple compound formulations towards specific medical indications. We have a strong focus on intellectual property creation and we are targeting both human and companion animal health. We spend time characterizing strains and products that we want to work with, studying technologies and delivery systems. We are looking to research a variety of different products with different delivery systems, form factors, depending on the specific indication. For example, it makes sense to deliver an arthritis product as a topical lotion, while a treatment for sleep or anxiety might best be delivered orally.

Can you discuss your development timelines?

For the balance of this year and into early 2018, we plan to conduct exploratory observational studies, begin IP protection and settle on formulation and trial design, with our first clinical trials beginning in the spring next year. The plan is to begin the drug approval process with our first product in 2019.

CANOPY-HEALTH TIMELINE

What’s your business model?

Canopy Health owns all of our IP. We partner for supply primarily with Canopy Growth or if needed in licensing deals with other biopharmaceutical, nutraceutical, technical device and/or medical cannabis companies as required, all with the objective of receiving out-licensing and commercialization fees on products we create. As mentioned, Canopy Growth is our first call customer.

Can you give us an overview of Canopy Animal Health?

It is a wholly-owned subsidiary of Canopy Health and will focus on creating cannabis-based healthcare products for companion dogs and cats in order to maintain, improve or extend the quality of life of family pets. Our focus is on palliative care, anxiety, appetite stimulation and pain management. We are working with contract research organizations with veterinary drug development experience. We believe there is a gap and need for a company looking seriously at natural cannabinoid drug development for our little friends who share many of the same ailments. We want Canopy Animal Health to be a leader in this area.

How are you financing product development?

We raised $7-million in a seed round last year and we are now actively in the process of rasing an additional $7-million to $10-million in an A round, which should take us well into our development plan over the next 3-5 years. Proceeds will be used to advance research and product development, pursue IP protection and commercialization, and for working capital.